Goldman Presents: Every Fiscal Cliff Scenario In One Brilliant Chart

Goldman's Alec Phillips has a new note out on the fiscal cliff,
and we'll just save you some time and cut right to the chase.
Nothing is going to be addressed until after the election.
And then probably most of the cuts and tax hikes will be pushed
back, but nobody knows for sure.

That being said, there is one really great chart, which shows
various possible outcomes, and the impact they would have on
GDP.Goldman
Sachs

So as you can see, there's the big dotted line that starts at the
end of Q4 2012, which shows that if nothing happens, we get a hit
of nearly 4% of GDP. Then there's the Goldilocks blue line, in
which everything is extended. The black line is their current
assumption, which is something in the middle.

But the past part of the chart, really, is the demonstration that
since the end of 2009, combined federal, state, and local fiscal
policy has been negative in every single quarter. Only
very briefly in 3 quarters in 2009 has government been net
stimulative to the economy. Since then it's been a negative
force.

It's well known by now that throughout the last few years --
contra the stereotypes about the Obama administration -- that
it's private, not public, employment that's been the star. But
you might not realize just how long now government fiscal policy
has been a net drag.